CVC Constable VAT Consultancy LLP

Dealing with transactions between different countries is a minefield of VAT complexity. Whether or not VAT is charged may depend of a number of factors such as:

• the precise nature of the service;
• where the supplier and customer are established, which may itself be difficult to judge with multinational organisations;
• the capacity in which the customer acts (e.g. a sale of services to a business may be treated differently to a sale to a private individual or a non-business organisation)
• where the underlying service will be “used and enjoyed”;
• whether required information has been obtained from a customer and is recorded on the sales invoice; and
• whether a customer is registered for VAT in the territory in which the service is deemed to be received.

Another dimension is that certain sales transactions do not give any entitlement to reclaim VAT on costs except when they are provided to a customer outside the EU. This means that as well as identifying transactions that deliver VAT recovery rights such services may lead to the need for tailored VAT recovery agreements with tax authorities to ensure that appropriate sums of VAT are reclaimed.